The Dynamic Risk-Based portfolios at Kerns Capital Management have long-term growth of capital as the primary objective.  As a secondary objective, but equally important, the portfolios seek to manage volatility and market risk.  In addition to generating profits during bull markets, it is just as important to protect assets during bear markets.  The primary goal during tenuous markets is capital preservation.

Portfolios

The portfolios include Aggressive, Moderate, Conservative, and Stable.

Objective

The objective of each model is based on the level of risk.  For example, the Conservative portfolio is designed to be a comprehensive investment solution for investors who are conservative in their tolerance for risk.  In general, this portfolio is appropriate for investors seeking growth of capital, but who are less willing to assume large fluctuations in the financial markets, and may have near-term liquidity needs.

On the opposite end of the risk spectrum, the Aggressive portfolio is appropriate for investors seeking growth of capital, are willing to assume larger fluctuations in the financial markets, and do not need access to their funds soon.

Example portfolio compositions:

Strategy

The risk-based portfolios utilize Modern Portfolio Theory, and take into account aspects of Behavioral Finance and forward-looking financial market conditions. Our process is based on a combination of tactical and strategic investment principles designed to protect against catastrophic loss and optimize the asset allocation.  Equity and income-based mutual funds or ETFs are used to implement the strategies.  

During major market corrections, we will take some or all of the equity holdings to cash.

If your objective is long-term growth of capital, while managing volatility and market risk, contact us for a free consultation.

Our Smart Glide Target Date portfolios are based on the concept that an individual’s risk tolerance decreases over time as they get closer to retirement.

With a Smart Glide Target Date portfolio, an individual investor is able to invest in one portfolio without worrying about making changes as their risk tolerance shifts as they approach retirement.

Smart Glide Target Date strategies are “intelligent” because they:

  1. Employ a combination of diversified and actively-managed tactical strategies, several of which can move to cash to preserve capital in severe market conditions;
  2. Invest in ETFs to keep underlying expense ratios low;
  3. Mitigate sequence of returns risk by being slightly more stock-oriented than many glide paths for younger investors, and less stock-oriented than many glide paths for older investors;
  4. Emphasize low volatility stock and short-duration bond strategies as retirement approaches; and
  5. Achieve superior diversification with increasing allocations to alternative strategies (such as risk parity) as retirement approaches, gaining exposure to return streams that are uncorrelated with stock and bond returns.

Smart Glide Target Date portfolios are adjusted periodically and managed “to retirement,” which targets the retirement date as the point where the portfolio risk is at its lowest.  Retirement typically represents the end of the wealth accumulation stage, and the beginning of the distribution stage.

Smart Glide Target Date portfolios are also well-suited as a qualified default option.

Here is a sample glidepath:

Target Date  Equities Income Alternatives
2020 10% 60% 30%
2030 20% 50% 30%
2040 35% 35% 30%
2050 50% 20% 30%
2060 60% 10% 30%

glidepath

Alternatives are flexible and opportunistic, and can invest in equity or income funds depending on market conditions, providing further potential for enhanced performance.

To learn more about the Smart Glide Target Date portfolios, contact us for a free consultation.